Swatch Group AG said sales and profit fell sharply amid a China-led slowdown for luxury watchmakers.

The Swiss watchmaking conglomerate, whose brands include Omega, Blancpain and jeweler Harry Winston, reported a 14% drop in sales to 3.45 billion Swiss francs ($3.85 billion) for the first six months of the year. That’s less than analysts expected.

Operating income plunged to 204 million francs from 686 million francs, which was also less than anticipated. As well as demand in China, the company also cited the impact of the strong franc.

Swatch said it expects the Chinese market including Hong Kong and Macau “to remain challenging for the entire luxury goods industry until the end of the year.” The company said it has kept production capacity to avoid layoffs while cutting costs.

Like other luxury watchmakers, Swatch has been under pressure since soaring inflation caused consumers to curb their spending after a pandemic boom. Less wealthy buyers in particular have been squeezed, hitting sales of entry and mid-priced models.

Management at the company, which is controlled by Switzerland’s Hayek family and Chief Executive Officer Nick Hayek, has also clashed with some shareholders who have criticized corporate governance and share-price performance. Swatch shares have declined about 17%  in 2024.